Consider the context of the IS LM model

Option A,B,D,F and H are incorrect.

•Option A) Decrease in government spending affects the position of IS curve and has no impact on LM curve . This is because equation of IS curve is Y= C+I+G+NX, where C= consumption, I= investment, G=government spending and NX= net Exports. So , keeping other factors same a decrease in G will shift IS curve leftward.

•Option B) Disposable income is given by Yd=Y-Taxes+Transfers. A decrease in government spending does not effect any of the factors of the disposable income so ,it doesn't effect the level of disposable income.

•Option D) The equation of IS curve is Y= C+I+G+NX , where Y is income level,C is consumption,I is investment, G is government spending and NX is net Exports. So, a decrease in government spending will reduce the factor G and will not have any direct impact on C i.e consumption.

•Option F) The equation of IS curve is Y= C+I+G+NX, where Y is the income level ,C is consumption, I is investment, G is government spending and NX is net Exports. A decrease in government spending affects the factor G and has no direct impact on I. However in long run due to leftward shift in IS interest rate falls and investment increases.

•Option H) A Decrease in government spending affects the position of IS curve and has no impact on the position of LM curve . LM curve equation is given by M/P= kY-hi , where kY-hi is demand for money and M/P is real demand for money , k is income sensitivity, Y is income, h is interest rate sensitivity and i is the interest rate . Decrease in government spending is not affecting any of the factor of money demand so demand for money doesn't increases.

????